it is not 10-year note and i have not traded it in three or four years, and at the end of the day, i buy a lot of bonds and a lot of value in the bonds because tax exempt bonds make sense given the dislocation, but i don't buy a lot of the 10-year note at 240. >> thank you, doug. great having you here. have a great weekend, everybody. time now for "squawk on the street." good friday morning and welcome to "squawk on the street," i'm david faber with jim cramer and scott wapner live from the new york stock exchange. and the markets are trying to recover from a rough two-day stretch. we have seen the dow fall more than 250 points. l let's look at how we are going to open the day. the futures point to a higher open, and we see it there, but we shall see, because the selling went on as the day went on. and let's look at the important

10-year yield. we are around 2.41 and we haven't seen those levels in some time, but we are keeping them there. and europe? how did we do over on the continent and elsewhere? a mixed picture there. spain was in the red it looks like, but other markets in the green. oh, yeah, looking at portugal, too. and as for asia, and japan's nikkei up over 1.6%, an shanghai down 1%, and you can see the hang seng as well. getting to the road map this morning looking at the markets. and looking at the day after a dramatic sell-off. david tepper telling cnbc saying that when the dust settles, the place to be is stocks. >> and free market trading after quarterly revenue misses, but at the same time doubling the dividend and looking to switch the stocks home from the nasdaq to the new york stock exchange here. >> and michael dell speaks, almost. we will have the details coming

up in that continued battle for control of his company. well, the stocks are looking to recover after the worst day of the year from the dow and the s&p 500, and both indices have lost all of the gains they had from may and june. experienced the biggest two-day percentage drop since november of 2011, but so far, this year, the dow is still up 12% with the nasdaq and the s&p up 11%. sometimes i think that we can forget -- >> okay. we should go the scott cohen there. >> you are pressing it. we are looking at jeff skilling as he is walking to court where he is going to be resentenced or even perhaps. scott cohn are you there? >> yes, jeff skilling and the first time in public since 2006 when he was sentenced in 2006 for the enron collapse. you can see that he has grown a beard, but looking well for 59-year-old after having spent six years in prison.

he will go in front of the judge that sentenced him to 24 years and along with federal prosecutors will ask for the sentence to be reduced and as such he will drop all of the remaining appeals. he was alleging misconduct by the prosecutors that would be dropped and some $40 million freed up for the enron collapse. the convictions will stand, and so skilling's efforts will declare his name to be overwith, but with this deal he will be out of jail at 2017 if the judge approves it a and the sentencing hearing to take place this af r afternoon, and jeff skilling in houston for the the first time in more than six years. scott cohn bringing you back to another significant period of volatility when enron and worldcom and adele fa aphia, an

other frauds. and now it is a bad feeling in part today. >> yes, because it is a leaky boat everywhere. you have looked mostly at the united states, but you have taught me to look elsewhere. and looking at china and the d hidden face of smith, i mean, mao, and the executing you at a certain time at a certain point if you don't report the numbers, because they are rigorous. and then europe, and you hear about the countries rising to 97 or 98%, and mexico down 6%, and brazil, and there are 1 million people in the streets. >> 1 million people in the streets. >> and you come back to find out the "financial times" and the bond market causing a sell-off in the etf industry, and what you come back to is that this is the dust that must settle before i am buying into tepper's

analysis. tepper is fabulous on "squawk" and he did not say i'm buying it here, but when the dust settles. >> when the dust settles, and only one place to be, stocks. >> dust is the million people in the streets of brazil and dust is the etf problem, and i don't like dust in my eyes when i'm trying to pick stocks. >> right. and when you look at tot the emerging markets, and that is ugly as we look at mr. tepper, and look, he has always said to buy stocks. i don't remember a time when he hasn't, and there are times when he does not buy them as aggressively and he shorts some things. >> and he says, listen, i got that wrong. but he obviously has not read the memo, because you are never allowed to admit that you are wrong. breakthrough. >> and the bond market carnage in one basket, and put the streets over in brazil in one basket and then put the tepper comment in one, and put the k

kostin note from goldman sachs about the s&p 500 rising by 10% by the year-end, and the "usa today" headline, stocks tighten and play them against each other, and jim, where do we come out? >> a lot of people are in the wrong stocks. last night with one pathetic eye on the basketball game, and the eye on the dharts, and the eye on the charts kept seeing things in the wrong places. when you get the statement, you will say, wow, "nem the wrong place. so a lot of people are in the poor decision. and the fundamentals are strong, and some companies are doing quite well, but there are people who are hiding in places and reaching for the yield, and those people have to continue to readjust the positions, and some stocks are suddenly buyable, but other stock, and we are in a weird period. carmax comes out to say that things are good. wow. maybe the autos are strong. and darden comes out to look like they are going to give the

food away, and buy one lobster and get one lobster, and it is bad. darden blames the economy for people not spending at lo of money to buy the breadsticks. i don't want to hear that. >> and meanwhile, we think that the economy is improving and yesterday the numbers in a different environment most likely would have been positives for the equity market, but we are not overwhelmed by the worries of the philly fed, and numbers that most people thought were better than they thought it would be. >> and i look at the bonds and how is the 10-year, strong. okay. buy me 50,000, whatever. we are in one of the moments and if we are not looking at the bonds, you know, having fun. >> and something else that people were looking at is the chinese shibor. we don't talk about it a lot. >> right, something that can jump up to bite you. >> and the rate has come down overnight, and they are trying

to tighten up the money supply, and tighten it up, and the corporate inflows are not as strong as they might have originally been for china, but all part of the plan in a way of 300 million people, and 15 years to urbanize them, and play a consumer economy and plays into the similar theme, but it is destabilizing and it definitely exacerbated what is going on here. >> look. we need to mend. there is a propensity to say, all clear, go buy. and the 2000 b-17 bomb raid is over, and now come out, and no! they did damage and we have tlook through it and look at that hcp is yielding 5, but i don't like the way that boston properties yielded 3 and simon property, and there are some situations that have not healed and others are like, i will get in there. >> that is why i like the tweet. time to be calm and not complacent, because there are some bargains everywhere and some stocks look good. >> it is a case by case market

and doipt want to come in sunday night, to see that they are issuing the pmi there every 30 seconds. the chinese, the pmi for the bricks to redo the great wall is weak. then china comes in and sets the tone. then some minister says we have been too tight, and another guy too loose. and then it is like toulouse la trek. and see if tepper is on, and i don't want to play that game. you remember joe grandville? you remember joe grandville game? well, tepper is rigorous, and grandville was not. i am saying that now that the market is down, do we to tepper? when we hadley yon cooper coming on, the judge's show, and saying

that the stocks are not the time to go all in, and i'm saying that tepper is not saying that it is time to go all in, but when the dust settles. i don't want to have my hand held and be in the situation to say, i'm worried about the -- and tepper says all clear, because he didn't say that. he didn't say that. >> right. and let's continue to talk about the individual stocks that are going the rule the day, and oracle down sharply in premarket, and the company reporting a fourth quarter revenue miss with the software and revenues come ing ing in lo. and meanwhile, they are reporting they will double the quarter dividend to 12 cents a share, and will switch listing from the nasdaq to right here at the nyse. so they miss on the software sales on the last two quarters and yet larry ellison is promising something startling in the cloud this week. >> well, there was some talk of them and microsoft doing

something. this is one that the travel trust gave up last night. just gave up. >> wow. and it did endorse the thesis that europe is bottoming an turning. i will say that, europe is better. they have that going on. >> and the reason they endorse is when they beat the revenues. this is disappointing quarter and sell it for the charitable trust and threw in the towel. there are enough companies doing well. >> with oracle, there was weakness in china and across, and what does that mean? u.s. was fine and in line. but shouldn't there be a concern based on oracle and what it is seeing in the far east? >> yes. >> when they can't close all of the deals and they are a good company. i don't want to hear that may was a weak month, and micron did not say it was a weak month, but smoking. >> and micron is down 7% year todate and down almost 8% today. >> i'm a believer.

>> they have fired 500,000 sales people and said it is important quarter, and didn't come through. >> when i have my head over here, when you got it right, say it, but when you are wrong, say it. with this oracle turn, i said it wouldn't, but that was incorrect. there are barometers that are executing poorly. i am not afraid to say it, i don't fear or cal kl. >> so if you are throwing in the towel on oracle? >> yes, i have to. >> and you bought more facebook? >> i do, because i have another job at thestreet.com, and little stock and i don't want the talk about it, but if you get video, you do the advertising and i asked all of the ceos of consumer product companies in "mad money" how do you get the word out, and it is facebook, facebook, facebook, and they will pay anything for the video. but they did have an ipo and burned people. this is a stock that -- how many

of you follow the hockey. what what are the most major penalties and the most men you can beat out? three on how many? i'm giving them a yellow card and red card. >> and it is 5.3 against facebook since the day of to ipo? >> pausbecause of the stock. i like the bruins, but i don't like this. this is the most hated. it is like lebron. we all hated him. and so they needed a lebron moment. they said we came out of akron and not harvard and that is bad, but this company's ipo destroyed any sort of positives that cub happening from the actual busine business. i have never seen it happen. >> and 13 months after the ipo? >> it is like a scab that is picked by people. because i saw that the charitable trust bought it and i looked at the fun dadamentals ai had to laugh. the guy wears a hood for the fundamentals and they pick the best people in america to work there, and fundamentals, but what matters is that everybody

lost money on the stock, but i could come back. >> and something could be powerful in there. >> i called the the numbers powerful. >> well, maybe some deal, a la netflix or disney to change the perception of it. >> this is good, david, but never buy a stock when the business is bad. oracle, facebook, but you have to face the fact that it is a free fire zone and not that there is a dividend and not that dividend matter as at the new world of 10-year at 2.23. when you put something out on twitter that you like something that jim cramer said, it is like you like the mop. and holy cow, to use a little perspective. >> whoa! my skin is crawling. >> yeah. >> let's talk dell, and michael dell makes the case for taking the company private. obl david has the lowdown straight ahead. and wi-fi in the skies, and

go-go going ahead with the ipo despite the market volatility and we will bring you the opening day trad and talk to the ceo as well. let's look at the two days of future with implied 66 points on the dow and so a little friday snapback to open it up. live from post 9 of the nyse when we return. [ male announcer ] i've seen incredible things.

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all right. welcome back. moments ago, former enron ceo jeffrey skilling arriving in court in houston and the federal prosecutors will be asking a judge to release skilling earlier in court today, and a proposed sentencing agreement could mean he is out by 2017 and this is of course reported first by cnbc back in april, and we are also by the way going to have enron whistle-blower sherron watkins coming up on "squawk on the street," and this is the first time we have seen skilling pub lkly in a little bit more than six years. it has been a while. >> it has been a while. well, he may be seeing the light of day in the not too distant future. >> what about the conference call when the stock was at 47, and ask him about the conference call? thanks, partner. i remember that conference call like yesterday.

he was cursing on the conference call, and blaming people for telling the truth. >> and ken lay, of course. >> and now we think of him as lays potato chips and i bet you can't eat just one and i bet that my mom would say you're sorry and never speak ill of the dead, but what about it. >> and now, let's move on the dell, because this morning in an investor presentation that was filed, we heard from michael dell almost as if he was speaking, but he has yet to speak publicly on the endorsement support and rationale most importantly behind the 1360 offer to take the company that he founded runs private. in fact, mr. dell, let's go through some the presentation, and you have it right here, and it is nine page or so, and a lot of the arguments that you heard before, and interesting. and it seems straight forward in terms of talking about the challenges that the business currently faces. transportation will be faced in the pc market, and we need to complete the transformation as

quickly as possible with the internet services system is not operating income fast enough to offset declines in the pc business. it is more challenging he says that would be as a public company, and it is likely to lower the gross margins, raise operating expenses, capital in the short term, and that is going to the result in lower earnings, and he says, hey, why take it private and do it in private? well, dell lives on the customer confidence and excellence employees and a lagging public stock price would hurt both. it is riskier to accomplish a transformation in public and decreases the financial stability and ability to weather an economic downturn and adjusts customer perception and employee retention. and so mr. dell in fact meets with the shareholders today at 10:00 a.m. and mr. icahn who has the recap plan out there funded by money

coming into the company, but another 5.2 billion in financing, and he says, with the 650 million shares left, i will pay you $5 and that will give you $3.5 million in operating income. and we think that you should go this route, and he meets monday and then the dell special committee to meet with the iss, and why? because it is important in the july vote. this is the first time we have heard from dell, and if you own the stock, take a look at the prez presentation, and see what you think. >> the stock is going down and they could have fired anybody, and why? because public/private, this is michael dell's company, and why does he need it to be private to fire people? he has been firing people all along. >> that is the crux, jim, of where this whole thing stands and whether there is a benefit to doing it privately than pub lk lkly. >> and the shareholders say, we will take on the leverage and

the risk and willing to take the money that we can get initially from levering up, and see what goes on in the transformation. >> and we know who the win eer is and i have been saying it all along since the interview, meg whitman. hewlett packard. >> yes. and selling the stock to carl. >> and how about carl on twitter yesterday? carl icahn on twitter. c underscore icahn and the first tweet. i like twitter almost as much as i like dell is his first tweet. >> we have mad dash coming up. ♪ it's friday ♪ i'm in love to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades

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what we do is really trying to look at the broader economy, and what we see unfortunately as we look forward to next year, the next 12 months, we have to plan around a economy that looks like the last 12 months and so 2% gdp growth or so. all right. we are about 5:00 from the opening bellk, and he has not been speaking to ben bernanke. >> and not ron shake of panera, because panera is not as concerned about the growth. you say that the price point is difficult, but what i find interesting is that olive garden and red lobster, they have had good saelles, but he has not brought down the bottom line. and they have a 3% yield. >> why not the bt testimoottom because the expenses are up? >> i think execution, and concern that unless they keep cutting the prices the consumer won't stay with them. but they are out of step with

the times. i really do. >> why? >> because people want to have an organic approach more, and they want to have a more youthful approach. i'm beginning to think that the name names are dowdy, and red lobster is dowdy, and they have to get people in, but they discount. panera does not discount, and where is the loyalty program and the buzz. now i won't say it is a bad stock, because it has a good yield and make a lot of money, but i am questioning why not the same store sales so good and not a lot come to the bottom line? is that is execution issue, david. execution. >> and all right. the opening bell is coming up and of course, a lot more on this friday. it has been a rough week at least through now. at a dry cleaner,

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bad. case by case, david. we are in a case by case world. >> and with the hype, 18 or 17 on the s&p? >> well, a good year. >> we had a good year on the books march 1st. >> there is the opening bell, and you are watching it of course right here at the nyse, and we have exchange mostly in the green which is a mostly change here. cole real estate investments is a reit, and we will speak to the cfo in a minutes, and goggo's ceo will be on in the next hour as well. >> and we will hear from the -- not necessarily putting all of the devices down. remember, they have changed the rule. what fabulous timing for them. i mean, wow, what a -- did they time it with the faa? that was fantastic.

>> very well timed. well, we seemed to be, and the s&p 500 up .25%. facebook supis up 3%. and automakers with gm gaining back .5%. >> and the carmakers did fabulous numbers and carmax is a good gauge of the used car sales which were up, and new car sales, because they are putting up in u stores, and autos are an area that are to worry about because of the bubble in the financing, and good to hear it is doing okay. >> we should talk about the home builders in a moment in light of everything that we have been talking about in the last 48 hours, and most of them getting a nice snapback this morn, and maybe not up as much as you would like to see them on a snapback, and jim, where do you go are the there? >> i don't trust that, because

maybe mortgage rates may be up to 4.24% monday. and don't you know, cramer, the housing market heats up. i think that bernanke didn't like it, and if the rates go up a little bit, it will cool the housing a little bit and the stocks are down for a little bit for the year, and people don't want stocks that are down. >> and oracle getting ripped 8%. >> and the salesforce.com is one of the opponent, and s.a.p., and those guys are all executing better, and s.a.p. is down today and probably a mistake. >> and the sales force to your point is up. >> and yes, one of the worst performers in the s&p this year which is unusual. >> a change in the model that oracle has not or is noted a dapting fast enough, even though they are moving up the cloud offerings everyday and rolling

faster than workday, one of the competitors in that area? >> yes. you get the license, and you have them picking off customers one by one. i had a health care guy come on and he said they are picking people off one by one. and my charitable trust we were believers and we were had. i don't like to be had. it makes me look bad than them. i believed and my belief was misplaced. >> so you and a lot of other shareholder s a shareholders are throwing in the towel? >> yes, it is one of the moments to say, and i know it is a lot of heat, but i was wrong. i say it a lot of times when i was right about something, but wrong about oracle, and ellison is not wrong, but i am wrong. ellisson did the number he did. and herd did whatever the bosses

did, and i was wrong. so it is my bad, and i own it, and i'm sorry. >> let me ask you this, jim, because people are at home sitting there wondering after you have a 550-point down draft over a couple of days, you have people out there saying to buy the dips, and when are the folks at home watching or the pros for that matter going to know when the flush is finished? people calling for a big correction for some time, and we are down 5% to 6% at this point. when do you know that the flush is out and you can believe a ak costa note that it is out 10% by the end of the year. >> when the bond rates stop going down, and it is up. that is the clear. >> and now we have to look at the 10-year, and the chinese shibor, and emerging etf a well in china. and the june statements, and people are going to be getting the june statement, and looking

at the mew nunicipal bond fund the lie, and it is not pretty. >> and stocks are going to not tell you that. they won't tell you that. >> and don't worry about the emerging markets, because they don't correlate. >> that is not north face, but sheer cliff. i don't like to look at the bonds all of the time, because i like the individual companies, but when i try to buy real estate trust, and if the yield is 5, and the excuse of the johnson and johnson and neither here nor there and down 4% yield, terrific. i don't have any earnings, and i don't know what they will be. i don't have the earnings for the home builders and they say that now that the mortgage rate is up, we will be hurt, but it is not enough for me right now. >> what if this caused a forced for lack of a better word restructuring of the portfolio, and it is not necessarily a bad

thing, and dupping all of the other things and you have an opportunity in tech, old tech and industrials. >> don't dump. if you are patient, and doing the long-term investment j and j at 79 is no different than j and j at 83. if you are trading, okay. i was on the "today" show, and conscious of the fact that we don't talk individual stock s ton the "today" show, but j and j and i'm worried that it may go the 79 and the people at home don't care about that, but there are opportunities developing because the stocks are coming down, and you have to take advantage of those if you want to outperform. >> rotation. rotate out of the reits and some of the other yield plays and go to the higher commodity plays. >> and i do expect micron to go to 18 because the quarter was solid, but not what it was in the 1990s. and talking about horizon or bbk

and the huntington bank shares are companies that give you the 5-year cd which is yielding 1.81, and they are investing at 1.53. the five-year has gone up in interest and making the spread. that is why the stocks are fabulous, and people say they are levered to mortgage rates, but it is cds, and they rick mag fortunes in the cds and a new group the buy, because they turn the lights on every morning and wow, look at that. those stocks are telling you what to do with your money. >> i want to get to bob, but before we do so, look at morgan stanley and june 28th is when they will close the ongoing and now overwith buyout of all of what was smith barney and they will be the largest in the country, and the overflow will go their way, and the cash balances will all be morgan stanley, and the cash balances helping and the net interest margin. if you have growth plans, you

will wait until you are holding the whole thing to put them in play. that is worth at least a mention. of course, wolf management, and our friend greg fleming running it over there. >> and citi was willing to get rid of the asset, because they see that it is going ow oing ou door each morning and they want to believe their clients are their clients and not the firm's. it is a point of contention, and i believe in the brokerage model and people getting help, but citi is the down in part because this is the big out of the internationals into the regionals, and it is extreme. citi is viewed as the merging market bank, and that is troublesome. >> you have to wonder about t t that. over to bob pisani here. >> we have held on to the gains, and some declining stocks mixed group, and yesterday pretty much down, and today, most everybody up. consu consumer staples, and financials and energy stocks and energy

sensitive groups like utilities and the reit etf is up 0.9%. so holding the gains right now. we did have a huge volume at the open, because it is a quadruple bewitching of the quarterly options and futures and the print that everybody got this morning, 1588 was the open on the s&p 500. i will make it simple for you, if you had a put for $1600 you made $12. that is a simple way to understand all of the fancy talk of the options expiration. so when we hit 1,600 yesterday and dropped below it, it was a strike price for the options. normally it won't affect the stock market, but the market dropped at 2:00 when we went through the important strike price. elsewhere, you have talked about the oracle a lot, but if you want evidence that the global economy is not going with the program, look at what happened to oracle. some disappointment over the licensing revenue only up one percent, but carefully, the weakness and the miss was in

asia and specifically in china as well as brazil, and also there was weakness in australia as well, and that is really oracle is not the company that complains about other countries, but that is clear think miss here. by the way, the nyse is crowing like crazy about the win over oracle. oracle is going to the list here at the nyse, and it is a big win. i don't know they will make a big deal about this, but it is the biggest market transfer ever of all exchanges and $156 billion and oracle is the largest company over there at the nasdaq and iconic brand at the nasdaq for many years, and a huge push by the nyse, it is okay to list the tech stocks at the nyse. i want to e mention what is going on with the emerging markets at the emm and all of the guys trading with me yesterday said that 25% swings on the yearly basis is the norm in the ee mshm.

you can see last year it was down 25% in a short period and same situation here. i'm not trying the make excuses for it, but trying to tell you that it is the life in emerging markets, and for the emerging markets and the overall global economy, everything is down 2%, and by the way, rebalancing at the end of the day. >> thank you, bob. have a good weekend if i don't see you. and rick santelli at the cme group in chicago. >> thank you, jim. of course, many eyes are continuing to focus not only on the stock market, but the foreign exchange and interest rate markets. if you look at intraday 10-year yield, i want to show you how many times we are bouncing off of the bottom. open up the two-day chart, and bouncing off the mid-30s at the most optimistic levels yesterday. open up the chart to one week. what's 31 basis points among friends? it is hard to fathom that we are at 244 today and 213 on the

close last friday. opening up the chart of 2011, and this chart is super important. first of all, why am i talking about the 238, and 239 and you will see the right-hand spike that we are in, and look at the last two and october of 2011, and march of 2012, because 239 in both cases. so if you were a disciplined trader, you could use the threshold to use ben bernanke's statements bush if it were to close in the 240s or higher, most traders go home short. and the way that the ek with tis are doing better today, that is something to pay attention to. euro and dallas and starts to slide before the opening and the definitely the strength in the dollar has been a big story this week, because you can see it on the month-to-date chart. jim, all yours. >> thank you, rick. we go to get the latest news. after the sell-off yesterday, the gold stocks and the gold

plays are awful. over to bertha coombs. >> you will be hard pressed the find a bull in gold today. we have gold on pace for the worst weekly performance and looks down 7% if we stay at the levels and silver down 10% for the week. gold not helped last night as the cme increased the margin requirements for speculators, and that sent gold to 1268 overnight, so in terms of the prices, it is a spectacular rebound from there, and the fact that we are steadying at all is a little bit of shortcoming says the traders. but nonetheless, you are not likely to see the trading in the rupees and the gdf are down. and things are stable now, but mike fitzpatrick over at kilduff says that it is bullish, david, and you can't say that about

go gold. >> thank you, bertha coombs. lost yesterday of course in the big market downturn and we got a higher bid for clearwire, and this time, it is most likely done and overwith, and checkmate, game, set, match, and $5 a share. don't ever believe the companies when they say it is not crucial to the plans, and when i first made reporting of sprint wanting clearwire and yes, in fact, they did. then i reported they would buy clearwire at 297 a share, and imagining it would be $5 to get it done. >> great call by you, because i said, how this worthless company, and you said because people are buying. >> well, i unz undderestimated despite both sides to the protestations to the contrary, and we saw it.

big week for softbank, and they get sprint done more or less and the shareholder vote next week and close the deal in july and clearwire done yesterday. the key is the minority voting provisions, and that i have glenview and crest and everything. it is done. it is trading 504 and it is over. >> that is important. >> it is important they clear the decks here it would seem. i don't know what charlie ergen is choosing to do. >> and you say bad week, but on the other hand a bad week for charlie ergen. >> he had a tender offer, but some concern he would not follow through, and that is unfortunately the dogs, the reputation, and they didn't follow through for sprint. big fanfare, and comes to new york and hires some bankers and due diligence and concern there. these guys say i get 5 and know i'm getting 5, deal done and we will sign on the dotted line and

you have our vote. so you will see sprint competing with softbank and remember $5.50 a share there. >> and competing against verizon and at&t. >> and this is at softbank's meeting, shareholder meeting, we will become the world's biggest companies by all measures ooeitr by sales, profit or market cap. he does not lack for confidence. >> well, that is hyperbole perhaps. >> well, he has 100-year plan. you have to give him time. >> i can trump h him with the 130-year plan. what is russian bond or what? if you are verizon or a tshgs a, the an and, the and you may sit back and say, holy cow, they got the spectrum, and they are going to build out, and we thought it would be a gentle du won -- du

duopoly. >> well, throw in the towel, and it is tim duncan and lebron, and it is done. lebron has a 100-year put. >> i bet he does. >> he is from akron, i believe. >> and not one, not two, not three, but -- >> they have the rings. >> and we will hear from sherron watkins talking about the fact that jeffrey skilling is in court today trying to reduce his prison sentence. and micron as jim mentioned up 3.5%, and merck and coca-cola and amgen gainers as well. i'm in my work van, having lunch,

next minute i'm in the back of an ambulance having a heart attack. i was in shape, fit. i did not see it coming. i take bayer aspirin. [ male announcer ] so be sure to talk to your doctor before you begin an aspirin regimen. see your doctor and get checked out. before you begin an aspirin regimen. we've been bringing people together. today, we'd like people to come together on something that concerns all of us. obesity. and as the nation's leading beverage company, we can play an important role. that includes continually providing more options. giving people easy ways to help make informed choices. and offering portion controlled versions of our most popular drinks. it also means working with our industry to voluntarily change what's offered in schools. but beating obesity will take continued action by all of us, based on one simple common sense fact... all calories count. and if you eat and drink more calories than you burn off,

you'll gain weight. that goes for coca-cola, and everything else with calories. finding a solution will take all of us. but at coca-cola, we know when people come together, good things happen. to learn more, visit coke.com/comingtogether cole real estate investments on the board and the reit was back on the boards in march when they were trying to acquire it. and he joins us here. listed on the big bank behind us. >> thrilled to be here. >> start out with the broader economy and looking at 48 states and 48 million square feet of

commercial real estate and what are you seeing from the tenants and the sense of the economy based on at least those tenants? >> well, we are seeing the recovery out in the field, and with rethe most active net lease acquirer of properties and have been over the last decade. we own 500 tenant concepts across the country, and we have the finger on the pulse out there, and seeing things improve. >> and you are, and six months and a year? you can go back to stay improvement? >> well, it is fundamentally different out there, and you have to keep in mind that we focus on the necessity-based properties and we are not subject to the discretionary spending at the consumer level so that the types of properties that we are focused on are doing terrific right now. >> and you did do a kind of say no defense to dick storrs, and he did want to buy you? >> right. >> he did. >> he did, and i don't blame him, because it is a high quality portfolio out there, and probably the highest quality and one of the largest.

>> and you guys thought that you would do better for the shareholders than this wiay. >> yes, we didn't like the offer on the table, so we put together a world class portfolio and world class management would be the best way. >> and this deal 16.5%, and that is a sweet spot that most of the investment companies have yielded at. >> especially, and looking at the clas ral that is backing up the income stream, it is compelling right now. >> your level of nervousness insight as to what you are seeing in the bond market as we see the yields back up, and back up violently. >> markets are sensitive to potential increase in interest rates. we have been taking advantage of the historically low interest rates for some time, and locking in the long-term fixed rate debt, but we have not expected the historically low interest rates will last forever, so we have been preparing for that, so nard to the long-term fixed debt

essentially into balance sheet, we have also got rental increases and rent bumps built into many of the leases. >> so you are feeling more or less insulated from the violent move up in rates and i don't know how high from here. >> yeah, and the fundamentals a of the portfolio are strong, and we tain a conservative balance sheet, and so we are relatively insulated from the fundamental report. >> well, now e that we are not g a lot of the commercial real estate. >> well shgs s, it is coming ba it is slow. you are absolutely right. so us being out there as one of the most active investors we can take advantage of the opportunities in the market right now. >> thank you, mr. nemer, for join g joining us. >> thank you for having us. >> the cole real estate investments ceo, marc nemer.

jim krcramer is next. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.

time for "6 in 60" and six stocks in 60 seconds give or take a few. we have a lot two on. >> well, it is a lot, and i feel badly speaking with mr. cole,

and mr. nemer and the fight was bad, and it is my bad. >> okay. moving on, and piper? >> well, in is a lot of games coming out, and people were shorted, so i didn't see it as a great stock. >> and outyear? >> well, goldman is leaving it. this is brutal. >> morgan stanley. >> still too early to buy zynga, what can i say. >> when it is not too early? >> well, you know, nevermind, because it is a terminal issue. >> and southern company? >> i see a lot of these, and they say that the utility tis need to come down, and i need that to come down before i buy southern. >> and bmo on kmb? >> here we go. this is the beginning and the guy guys who say, look, i didn't buy the stock, because the valuation was not great and a sell on it, and great call. and not all along, but it is time to buy. that is what i am seeing, david, these stocks will come in and

time to buy them. it is early, i say. >> early? >> yes, a good company, and i would not sell it. >> and what do we have the night at 6:00 and 11:00 on "mad money." >> well, i will give you the ones that it is not too early and the ones down to know it is right. and i have the game plan for next week and doing some technicals on it, and the vix -- >> technicals? >> well, you want me to talk about the head and shoulders? >> well, that? >> yes, yes! >> i am going to watch. >> well, the vix, and i have to relate the vix, and the vix is in charge here. i will do that procter and richardson and vix, and lit please you and me. >> all right. i will be pleased 6:00 and 11:00, and have a good weekend, buddy. >> you, too. >> and we have a lot coming up, including the two-day sellback, and we are waiting for the intern

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map, the day after the worst sell-off of the year, the markets are bouncing back. and james bullard is sounding the alarm and we will tell you which of ben bernanke's comments bothered the st. louis fed president. >> and on the slide, gold is falling below $1,300 and will the correction in bullion continue? we will give you the levels to watch now. and former disgraced enron executive jeffrey skilling is arriving in court, and his s sentence could be reduced to half. we will bring you the details. >> and james bullard is out with a decision to say that the fed's decision to announce the plan to reduce bond buying is what he calls inappropriately timed. steve liesman our economic times reporter has more. steve, is this something that the minority committee should do this? >> well, the dissenters have taken to putting out the statements on the friday after

the meeting, but this is an unusual dissent for at different reason, because bullard is one of the two fed chairmen to say he voted against the statement, and this is why, because, i will show you in a second, that the feds should have strongly more signaled the inflation target which is 2% inflation. and he says that is a surprise to the downside this year. and to maintain credibility, the fed, according to bullard has to defend the inflation credit whether it is above or below that target. think about what the fed would have done if inflation was 3% or as we will show you in a second, it is around 1%. and bullard says that the plan laid out is inappropriately timed. president bullard felt that a more prudent approach would be to wait for more tangible signs that the economy is strengthening and that inflation was on a path to return toward target before making the

announ announcement. he says that the announcement was not accommodative, and you can see the decline there, and you can see the white line which is the headline pce numberk and both of those are inflation gauges below 1%, and 0.74, and the fed is more tied to the core number above 1.0 right now. and you can see the declining fed expectations in this chart that looks at the tips numbers out there, and they have fallen quite precipitously, and really fell out of bed yesterday. meanwhile, the kansas city fed president also dissented saying that according to the policy, and she did not come out with the statement, but she says that the fed policy would lead to spike in long-term inflation, and simon, what is weird here is that bullard's statement, and the dissent is against something that is not in the policy statement, and it is a dissent to what bernanke did when he came out at the press conference

and read some form of a resolution, and that is what is weird. he dissented against something that is not in the policy statement, and that makes what bernanke did to read a resolution or acted from some authority of the board that was not the statement. back to you guys. >> but the central question as to why do it now is really important, and in the sense, you can put it, it is obviously focused on inflation, and goes with what tepper was saying earlier that made the announcement that something is coming, but we don't know when it is going to come, and it is day-to-day, and in the meantime, you have a huge market reaction particularly on interest rates around the world which may never go back down again, steve. >> one way, simon, is to look at the 10-year leading up to the meeting. bernanke had what he wanted. the market had cooled off a little bit and the interest rates were a little bit higher and the market had priced in the possibility of this, and why

actually say anything when you have essentially gotten what you want to call it the coming off of the boil that you'd had prior to the meeting. you are already at 220 and up off of the lows and 60 basis point moves and this does not help the fed and the 10-year yields at 240. it won't kill the economy, but it does not help the fed coming off of the stock where it was or the 10-year yield rising to where it is. >> steve, this is scott, and what is the usefulness of whether it is in practice now that is this is what the guys do, to give the statements after they have dissented within the meeting, but how useful is it? it is like the star player coming out of the locker room revealing what the coach said, and if you said that he is not criticizing the game plan, but the coach. >> it is interesting comment, scott. i think that the dissent was public, so that i think that the some of the guys feel they have a requirement to explain

themselves. the use of this from the market standpoint is that a dissenter can lead you astray or lead the way. and sometime, they are just off to left field. this concern about the inflation is an interesting one and how the fed processes it. so i am sort of glad that bullard came out with the statement, because i believe it is an interesting question for the next several meetings if inflation stays at the current level or even eases off a little more. >> and steve, finally, before we let you go to return to the central reason as to why they do it now? presumably the calculation is that when they exit tapering, there is a huge amount of turmoil in markets, and maybe they believe that a stepped approach to that will overall lessen, because if you were doing it now, all hell would be let loose at this way. >> yes, i know that bernanke did

not want the market to be waking up one moment, and to be surprised that there is tapering, and that is a big part of the reason. and the other thing, simon, we on the show, and elsewhere in the market, there is a lot of criticism the substantial improvement and what the reaction function is of the fed, and they felt a need to come out the provide some more detail on it. i don't think they thought that the market would react the way it did, but they were stepping up to bat supposed demand out there in the marketplace. >> well, let e's hope as we accelerate to the end, they understand how the market is likely to react. >> well, the major indexes are trying to bounce back from what is the worst intraday drop this ye year. barry nap is head of the portfolio at barkleys, and scott rand joining us fr.

and is there a sense that equity prices are as high as we want them to go? >> welle, we need to step back and realize that in september of 2010 there was a significant inflation priced by the market with five-year forward inflation breakens and the same in 2011, no justification for qe forever in 2012. those break evens were in the middle of the range. so the fact that they are now moving towards or moving the stimulus is to be expected. they were in es sen risk managing against the ig ber than expected fiscal drag, and u.s. taxing itself like mexico and spain did. >> well, if we see the five-year break evens come down, and they broke significantly -- >> kelly to, where they were a year ago. right. they were in the middle of the post crisis range at that point. my whole point is that the

starting point was not justified if you are an inflation-targeting fed, it made sense in the summer of '10 and summer of '11, but '12 not so much. the fed is potentially concerned they will have unbalanced portfol portfolios, but we are excited about something that looks so identical to 1983, 1994, and 2004 which were 7% and 9% corrections, and completely different rate cycles in terms of the level of aggressiveness and the market valuations were in the right place, but in all cases the corrections were 7% to 9% and they started with the most sensitive part of the stock market and broadened to cyclicals and as the data was okay, the fed did not take away the punch bowl too easily and the market stabilize and that is what this looks like again. >> scott, would you agree? >> well, here's what i think. first let me say from the last segment, i don't often or always

agree with jim bullard the st. louis fed here, but i totally agree with jim bullard here. this is bad timing on this. i don't think that the fed will tape ther year, but obviously, certainly they do at some point. and i wrote a thing about the conspiracy theory, a nnd the fe was trying to take some air out of the housing market, and stock market and they don't want it going up 10%, and housing prices rising 10% year over year for the next five years, and they want to nip the bubbles in the bud which we are no longer in. this pullback as i have been telling the clients, it is an opportuni opportunity, and we haven't had many opportunities over the last couple of years. you need a plan and know what to buy, and when you get the pullbacks, you have to step in there and execute. >> yu see sh-- you see, scott,

ago we had the narrative on the show, but both of you have used the word "bubble." you are saying that you are worried they are creating bubbles, and nipping them in the bud before they started, and barry, you also said worried about bubbles, so is this a bubble in the stock market? in other words, those who are concerned that we cannot sustain these levels without the promise of continual fed printing of money, and that the market will fall as they taper, barrbarry, those concerns legitimate? >> bubble would be sensationalizing the situation. fundamentals are ahead of the core, but i would not deskrcrib the equity market as a bubble at this point. i believe that the correction will continue. we never thought we could get into a sustainable upper right level move to use dennis gartman's term into the year 1995 until we got through the

normalization process. >> but barry, you are saying that the market is ahead of the fundamentals and in other words, are you saying that the growth is not there solidly enough to support the market at these levels and the jury is still out? >> what we are saying is that the market had had an undue move for the magnitude of the improvement. we believe that domestic demand is improving and we took an incremental step today towards reducing the exposure to the stocks that we buy on the characteristics and the defensive names and covered in underweight in the consumer discretionary sector and do think that you want to come out of the normalization related correction with more cyclical expo she's ur, but it is early in the process, and lit go on for seven more months at a minimum before you gain significant cyclical exposure, and i'm agreeing with the trajectory, but i would nout

state -- would not express it in extreme terms. >> thank you. eamon javers saying that no longer providing economic reports until further notice. >> you will remember this, because we did it on your show talking about the unusual trading that we saw with the help of folks over at nanex, llc, ahead of the consumer index. we saw the trading happening a millisecond before the news came out publicly, and at the time we asked the conference poord what happened there, and they said they didn't see a problem and know anything about it, and they said that we were the only ones to call them with questions about it. well, last night the conference board came out to make an nou announcement saying it is going to change the way that the data is being converted because it is converted early to the high

frequency traders and stop the media embargo, and in the other days, the media would get the information on release days early and have a chance to process it, but what is happening is that the media organizations in the high frequency trading era put it in the frequency pipes. and now what the board has said with the growing influence overprivate data, the news outlets and data providers and trading measured in milliseconds, these situations are difficult to monitor without legal and technical clarity. so there is the day this going data release operations. they say they will e-mail it at precisely 10:00 on the morning and on a secure ftc site, and nobody can download it, but nobody gets a head's up before

10:00, because they are aware it is leaking out early. >> well, one step forward and two back, and we know we will have an update on that important issue. thank you. and michael dell taking heat for taking the company private. and oracle under pressure with the stock trading double the ten-day average volume. we will tell you how you should be playing the stock. is this a buying opportunity? [] we've been conditioned to accept less and less in the name of style and sophistication. but to us, less isn't more. more is more. abundant space, available leading-edge technology, impeccable design, and more than you've come to expect from a luxury vehicle. the lexus es350 and epa-estimated 40 mpg es hybrid. this is the pursuit of perfection.

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and remember morgan stanley was up a little bit and many of them suffering 2% declines there, and perhaps the story that we will see minimum capital requirements for the largest banks raised to as much as 6% of the total assets, unclear beyond that what might be contributing to the weakness there. but we did want to point that out. moving on to the dell this morning. we have yet to hear from michael dell per se, and certainly not opened up his mouth to speak in favor of why it is that he wants to take the company private at 1365 in a deal that would give him essentially 75% of the equity of the resulting private company, but we did get a big investor presentation from him this morning, as he meets with institutional shareholder services, the proxy advisory firm that could prove to be important in terms of the july

18th vote on mr. dell's deal, and a vote that he will not be able to vote his own shares. quickly to go through some of the points that he makes in the morning's release essentially was filed this morning, this presentation, and he says that dell's transformation in order to compete in a changing pc market and he was blunt about the fact that they have not moved fast enough to get away from the pcs and that transformation is ongoing and challengings a public company, and if in fact, you do a recap and have a stub out there, which is a piece of equity, and he says if you have a lagging price hurts customer confidence and employee commitment. and he is trying to go away from the pcs and go to the financial services, and go from a public ball laance sheet, and going to

private. and mr. dell is meeting with the stockholders right now. carl icahn's plan will get a look at it next week. and dell has done a good job by trying to make a process by which you will eliminate as many conflicts when the founder and the ceo wants to take his company private. >> let me ask you a question, do you think that michael dell's credibility is hurt at all by the fact that hp has managed a comeback, and in the same business and meg whitman has not come tout say, we can't turn the "titanic" around, and in the public markets? >> right. >> everybody looking at what hp's stock has done and one of the best performers of the year. >> and of course, it was one of the worst. >> and does it hurt dell's credibility with the argument at all? >> yes, it does. we have wondered, scott, if dell was unaffected and no buyout or

nothing going on and where would the stock be given the multiple on the stock, it might be here or higher for dell, but it is an interesting point and one that is worth raising and considering at least. >> because i am not saying that hp is going to take their business, but business and stock are two different things. >> yes. >> that is my point. >> but they might benefit, dell, of the halo of the rising effect of hp. >> that would be a hard rap. former enron ceo jeffrey skilling arriving in court with his prison sentence possibly cut in half. we will be live at the courthouse with the details. and the whistle-blower behind enron sherron watkins will join us in a few moments. [ male announcer ] with wells fargo advisors envision planning process,

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district court in houston where a short time ago enron ceo jeff skilling the former ceo made his first public appearance, sort of public since 2006, and he is here in what could be the ultimate tradeoff trying to get a reduction in the sentence of enron's epic collapse, and he will give up the further legal appeals including an explosive motion charging misconduct by the prosecutor of the case, and giving up some $40 million to be returned to the victims of the enron collapse, and in exchange, he will be released in a date certain. he was originally scheduled to get out in 2028 and in this deal he could be out in 2017, but none the lex it is a far cry from what skilling hoped for in 2006 after being sentenced that he hoped to clear his name. >> i believe i'm innocent, so i believe in the long run that the system, i think that when we

review this in a somewhat calmer atmosphere than has existed in the last five years people will look at that and i hope it will work out fine. >> well, it has worked out differently than everybody thought. skilling is not going to try to clear his name legally and the government saying that it is agreeing to this in order to get it over with. the judge who sen etenced him originally hawill have to chang the sentence. and in 201, enron files for bankruptcy, and in 2004, he was excited for conspiracy, fraud and insider trading and 2006, convicted on 19 counts and sentenced to 24 years. they said that the prosecution's case was flawed and the court of appeals said that it is a harmless error, and upheld an

earlier ruling that the sentence was too harsh and here we are to d today for the resentencing, and today while much of houston has moved on, there is a die-hard group that honestly believes that enron is a great company, and a lot of people here in jeff skilling's support when the hearing gets under way this afternoon. scott? >> scott cohn, and thank you so much. ing? tells me that the person who is going to join the fro gram may have a different opinion than all of that, sherron watkins, the former vice president of enron, the whistle blower is going to be on this program in the 11:00 a.m. hour. and focusing on oracle, under pressure with the weight of the results, but you would not know that they had doubled d the quarterly dividend and authorized a stock buyback of $12 billion. but the problem is that they are not growing revenues as they did last month. let's bring in an analyst with cohen, and peter, good morning. >> morning. >> in the last quarter, that i blamed their own sales staff

that they could not get revenues burk in quarter, what is it? that they cannot compete with their own line offerings? >> this quarter, they say it is not execution issues, but blamed the problem on the economy in general. >> is that washing with you? >> no, not so much. i think that the problem is deeper structural problem and i think that oracle as a 25-year-old technology company is stuck in a position to defending legacy products and legacy pricing models against a new wave of competition that offer better products at much lower prices. what they are seeing is that early days in losing business and really disrupted from below from a lot of the new lower cost, lower total cost of ownership vendors. >> but it is still something that the investors should stick in it and hope for better times? can they turn it around? >> we have a neutral rating on the stock so that translates to a hold. the stock hit ten times

earnings, and the earnings is nine or ten times and a nice free cash yield of 9% paying a dividend and as long as they can maintain the elements like the ability to renew the maintenance contra contracts, they may not be growing top line, but the stock is not pricing that in. what i worry about is how long are the guys going to be able to continue to renew the maintenance contracts? the maintenance contracts are half of the company's revenue and 92% net margin-ish business and if the customers are de-emphasizing the spend with orac oracle, it is reasonable to expect that at some point they will start canceling the maintenance contracts. until that happens youshg won't see a material break in the model, but we will see it happen, and i don't know when, but you don't want to be in the stock when that happens. >> peter, thank you for the analysis. and we will quote the nasdaq to

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with such a turbulent week to be market, it is appropriate to check the technical damage

done to so many technical classes. we are joined by gray wolf execution partners executive. i know you want to talk about gold and we have moved below 1,800 per ounce. where are we now? >> well, it can go lower, and gold is off 30% from last october's peaks. if you look at the chart in the last few days, gold is under the lows from march and april here which does keep it in the near-term vuler i nenerable sta. and not like gartman in that i'm bearish on the gold forever, but we are close to an area to buy it. >> some people say it is oversold at the moment. >> yes, weekly and monthly basis and it is important the note that 8 of the last 10 years the gold has rallied from august into october. and it is a bullish time to own it, and so we are oversold, and getting into the bullish time, and right to buy in the dips of

gold. >> but it could go down to 1240? >> yes, from here, 1290 and probably another 50 or 60 points on the downside. >> of more interest to the people, where are we on the s&p? >> well, yesterday was sort of important to have two 90% down days and the volume has been heavy on the down versus the upside, and we are getting to levels that are important in the short term in terms of support, and even though we have violated the 50-day average, we tend to bottom out in the short run. we have seen tdee tearation in the markets of the u.s. and japan. and not only were the highs in 2007, but there was a level of support based on a couple of methods and gan and hq mocu clouds, but i am concerned bt the structure of the markets and the s&p. >> what does the weekly chart show you? >> the weekly chart is gradually

showing more and more deterioration and momentum. even if we rally out and rally, the time from october to october is likely to be down. we have seen weekly mac d which is used to gauge the momentum, and seasonally weak year, and post election year are typically the weakest of the four years, and cyclically, we are late in the stage -- >> you have confused me, because on the last chart you told me that we could bottom and bounce, and i may have misheard you. now you are saying bearish? >> not at all. we are close the levels to stabilize and bottom more from the trading perspective, but the bigger picture more than any rally to sell at least the next four to six months down in the market. >> for the people at home trade morgue slowly or investing for the long term, a red flag. >> yes, neil hirsch said, sell in may and go away. we have started to see the rollovers burk for those with a

longer time frame, wait for more consolidati consolidation. >> thank you, mark from gray wolf execution partners. big drops in the credit markets as you know, but we are going the tell you about one asset class that could keep you safe. and find out what tesla's maker elan mus had to say about it coming up. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me.

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we are keeping an eye on the financials today and the sector is getting hit and some of the biggest decliners are citigroup, and b of a holding up et ber, but there are signs of stress as well if you look at the credit default protection on the financials broadly speaking and nothing major, but the kinds of jumping in the last day or two that are indicative of what one strategist brian reynolds over at rosenblatt is calling signs of panic in credit. the extent to which the

financials on the equity side are hit by the panic the credit market may help to explain why they are underperforming. >> well, it is the reserves at the rest of the world at a time when the dollar is gaining and worth less in drollar terms, an deteriorating market. those assets are worth less by the hour is the issue. >> and important to know about capital levels around the world and focusing on that. and lot of it come back, to macro, and a lot of it is on concerns that the tightening is premature, that will hit the banks at the time when the rising rates might be a tailwind for them. >> and they have bounced quite well. >> and earnings are not that far away and the banks are at the front end of the earnings season, so you will get a good read of what is happening for the banks and where they believe that the environment is leading here. >> and david faber said that if we see the offering hold a deal a month or two over the summer,

it could be a challenge for them in what is a slow earnings rate time of the year as well. >> and now we go the rick santelli over at the cme. >> thank you, judge. the last few sessions have been volatile ones, and try i to make order out of it by talking to the traders on the floor and many traders brought up a phrase and it is telling. so asking mosted fixed income traders and -- well, first of all, they want to voice a complaint, because most of the traders have heard the officials and the analysts and the economists in the last 36 hours weigh in on the interest rates. they don't like when their product, the 10-year note is called the bond. they want that out there, 30 years of bond and 10 years at a note, and anything under is a t-bill. i'm their buddy and doing them a favor. but they brought up the phrase stress test. they said we are going through a stress test in the markets. i asked them to explain. they said, no matter what you

feel about the programs, we have the qualifier through the fed issues like the qes, but at the end of the day, you have put the premiums or the discounts in the markets however you view it, and when a dose of reality, and the market can do it back on its own comes in, there is a stressful adjustment in the world of high speed and same-day news cycles. steve liesman did a great job the say, no at the -- no matter what you feel about the market, they are always looking to the end result and they will sell the euros and the t-bonds and any instruments, because it won't matter, because the market is and will flex muscles to prove it is larger anybody who can control it for long. i saw something in the "financial times" and also in andrew brenner's blog, a wave of

selling caused many exchange traded funds to tumble below the value of their underlying assets as a bond market sell-off caused stress in the $2tn etf industry. and so it may cause us to hedge to some extent, but it brings in the bigger capital than the other guys. we have heard this about break evens and inflation. talk about that so that everybody knows. if you are basically taking the nominal rates like a 10-year note, you subtract the tips what you are get ting is the break even. i have been surprised to see how calm it is. on the first historic low yield of 163, and that minus a negative 166 on the 10-year tips is around 2%, and 1.99 to be exact but yesterday on the

closers, the 163 minus the 241 and something to watch if you believe it is a perfect gauge or not. >> rick santelli helping us understand what is happening in that space. there is one asset class that could provide some shelter this week. and kayla tausche is here to tell aus bt it. >> well, it is smaller asset class, but the floating market has gotten more positive to allow downside on the price and potential upside on the yield, because it resets against the benchmark, and three months libor although expect ed ed to e is to go forward and that is why they haven't seen a massive sell-off, because expectation of the higher yield. you can see the index which is down, and the floating index is down 0.5 of 1%. traditionally the floating rate notes were reserved for the l

lower credit issuers and could not issue junk bonds and the blue chips in on the action and pepsi and comcast and the u.s. treasury is floating a qe bond as they are in more cautious deals. and apple investors have lost 760 million in total value in a short matter of time. apple has issued two-year bonds, but they are expensive. in june, they backed off anticipating that the rates would rise. chevron cancelled two floating rate bonds, because they didn't want that interest rate risk. that is what is happening for investors who reported a record 1.4 billion into the asset class last week. the problem, a smaller pool of money to be chasing, but no nonetheless, there is still a lot of upside to be had there.

thank you. >> kayla, a great point. we should remind the retail investors who wants the exposure to the floating rate notes, a lot of the notes can be extremely expensive and they have to make sure that they won't take a hit right off of the top the make up. >> exactly right. some invest in loans and some invest in bonds and important to read the fine print and know what you are getting. >> fascinating asset class. thank you, kayla, and keep an eye on that one today. looking at the ipo open for business right now, and one that is not performing that well, and that is gogo. the stock is trading $16.44 and down 3% off of the open priced at $17 a share. it is going to offer internet service in the air and this is one of the companies that does provide it. that is the first day of trade and not a great one coming at a rough time for the markets overall, so one to watch certainly throughout the trading

day. >> and the ceo is going to be on the program very soon, and very quickly, and very soon, and "life in the nasdaq." so look out for the ceo of gogo. we will also speak to the whistle-blower of enron sherron watkins, and jeff skilling is in court today trying to have 10 years cut off of his sentence. what do you think of that?

90 seconds, that's all it takes for tesla's new battery swap. phil lebeau joins us with all the details. this event was a little overshadowed yesterday. >> it happened last night at the tesla design studio in southern california, and when we're showing you here this battery swap, you're going to say to yourself, doesn't look very visual. and the fact of the matter is it's not. there's a hole in the ground and a robot comes oupt and changes out the battery. the whole idea is it's faster than if you had to go out and fill up a gasoline tank. it only took them 93 seconds to do the battery swap while a car at a gas station that was on the video screen behind the model s, that took more than four minutes. now, the cost of doing this once the system is up and running, going to be probably in the range of $60 to $80. it depends what gasoline is

going to cost in a particular region of the country, but tesla ceo says they will make this system available nationwide eventually. >> we need to address the reasons that people are not buying electric cars. so in order to have mainstream adoption, people need to feel that they have the same level of freedom that they have with gasoline cars. >> and the whole idea is that perhaps if you're going across the country, could you stop at one of the tesla super charging stations that also have the battery swap option at them and then you could zip in, zip out, get a new battery pack. it will be available for the model s and for the model x eventually. and again, the price is going to be somewhere in that range of $60 to $80. it likely will vary depending on gasoline in a particular region. you look at shares of tesla up fractionally today, but the important thing to keep in mind is if this system works in reality the way they have laid it out on paper, it could be a game-changer. but the key here is whether or

not people look at this and say, i want to go in, zip in, zip out, get a new battery and be on my way for a longer drive. but around town, most people are still going to be charging up at home. >> that's certainly the easier way for now at least. thank you very much, phil. >> the home builders are another casualty of this week's big market sell-off. according to mkm partners, major home builders stock climbed an average of 118% in 2012. this week though the sector has plunged amid fears of rising mortgage rates. megan mcgrath is a home building and products analyst. brad hunter is metro studies chief economist. welcome to you both. megan, i'll begin with you. do you think that these rates here are a killer to housing? i'll ask you that in the context of, you know, we had ivy zelman on another program yesterday, and she said she remains very bullish on housing, but obviously with an eye on where rates are going. >> yeah. no, i don't think it's a killer for housing at all, but i do think it puts more pressure on

things like employment and income. so if you think about what goes behind affordability, which is what we're all focused on now, it's mortgage rates, it's income, and it's house prices. house prices are going up, mortgage rates are going up, so we need incomes to start going up and that's what we'll be keeping an eye on over the next couple months. >> brad, what do you think from the broader housing story here as we continue to watch rates back up and it's been a violent move and that's obviously scaring a lot of people. >> it is. everyone is getting a little spooked that the fed is taking away the kool-aid bowl, but what i think is going to happen at first is that people will actually increase their interest in buying a home so they can lock in a low mortgage rate before they go higher. now, if mortgage rates go higher, which they will, it's not an if, it's a when, then the monthly payment is going to go up, and that's going to compress the left tail of the bell curve if you think about the income curves. and that's going to reduce how much people can pay for homes,

what neighborhood somebody can buy a home in, whether they buy new or used, things like that. a move from 3.5% mortgage rates to 6% is a 34% increase in the monthly payment. >> and that, megan, is the point, isn't it? for any couple wanting to buy a house with a given pool of cash and a given monthly income, the size of the mortgage that they're going to be offered automatically falls as that mortgage rate increases. and, therefore, what you can sell a price for in the market given supply and demand is going to fall. in other words, the margins of the home builders are going to be squeezed. it's just simply, megan, a question of mass, isn't it? >> i think you will see the rate of increase in house prices start to fall, so we've seen a pretty significant pricing power on these home builders in the last six to nine months, and you're probably going to start to hear in the next quarter or so they're not feeling that rate of increase. i do think next week when we hear from lennar and kb, they're going to tell us they haven't

felt much of an increase yet. you could see the stocks pop a little bit next week, but i would expect over the summer the stocks will be very volatile until we get some clarity around what the fed is doing and what the actual impact of these higher mortgage rates have been. >> i mean, is there a level that you're specifically watching, megan? if we go over 2.5%, let's just say we go there because we're not that far away, at what point does your story change and become much more dramatically negative? >> i don't think there's really a magic number. again, there's more to watch than just the interest rate, but keeping all that aside, if we do see, let's say, and remember mortgage rates might not rise as fast as the ten-year, so we have to keep that in mind as well. if banks start to try to gain share a little bit, they might not raise that mortgage rate as high and they might be willing to take a smaller spread. what we really are watching again is as the mortgage rates go up, if incomes don't go up and if employment doesn't get better, then, yeah, if we saw

another 75 to 100 basis point increase, we would start to get significantly worried. we need so see the other factors start to rise faster. >> okay. we'll leave it there. >> brad, i'm sorry, i apologize, we have to leave it there. i know we'll revisit this at some point. my apologies. enjoy the weekend. we'll talk to you soon. gogo is making its nasdaq debut trading lower than its $17 ipo price. we'll talk with the ceo coming up. every parent wants the safest and healthiest products

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welcome to "squawk on the street." here is what's happened so far. >> this is not a time when fear should take other. this is the last of a series of hurdles that the markets have had to go through as they work their way book to a nor mormal environment. >> i obviously thought they should start to taper. bottom line, when the dust settles, only one place to be is in stocks. >> there is jeff skilling, the first time we've seen him in public since 2006 when he was sentenced for his role in the enron collapse. some minister over there says, you know what? we've been too tight. another guy says we've been too tight, too loose. next thing i know we come in and the fishers are down six.

someone get him on the phone, see if he still likes it. i don't want to play that game. >> we're the most active net lease acquirer of properties and have been over the last decade. we own 500 different tenant contracts across the country. we have our finger on the pulse out there. >> this pullback is an opportunity, and we haven't had many opportunities over the last couple years. you need to have a plan. you need to know what you're going to buy, and when you get these pullbacks, you have to step in there and execute. >> good morning. we're live here at post 9 at the new york stock exchange, and stocks are fighting to recover after a sharp two-day sell-off. in fact, the dow is on pace for its worst week of the year. 44 points, probably won't be enough to get rid of that

statistic. the s&p 500 and the nasdaq, the s&p adding about just shy of 0.2%. the nasdaq is lower. dragging it down is oracle because shares are falling this morning. more than 8%, in fact. that stock tumbling after its fourth quarter revenue came in well below analysts' estimates. oracle sales missed estimates for the second straight quarter. the company will also be switching its listing here to the nyse. >> this is our road map for the next hour. we're going to kick off inevitably with the markets and your investments. stocks fighting to rebound today after this week's massive fed inspired sell-off. we'll tell you what to buy and where. the former head of enron, the disgraced jeff skilling in court today. he could be getting out of prison much sooner than expected. we'll talk to the enron whistle-blower, sherron watkins. >> and the conference board will release the way it changes

information to the market. eamon javers will be triumphantly here with the ceo. it's been a really volatile week for stocks leaving a lot of investors wondering whether they should be in or out of this market. let's ask david seeberg, and david kelly. good morning, guys. >> good morning. >> morning. >> we've got two davids here. first, this reaction since bernanke's statement since the press conference wednesday has taken you by surprise, has it not? >> it's taken me a little bit by surprise, absolutely. him putting some finer details on it i think took everybody by surprise. i think what i have said in the past, one of the most important tools or valuable tools that the fed has had is their mouths and how they communicate with people. and the way they communicated, they put some time lines on there and i think, quite frankly, ben took a major overhang off this market by putting that time line on there. i know simon is probably going to disagree with me like he's done in the past, but i think

that's a very important, very important thing to know. major overhang off the market. we're going to take some short-term pain but long term i think we're going to eventually get through this. >> let me not disappoint you then, david. i mean, the concern -- it's not about me and you, whether we disagree. the major concern here is, a, how just simply saying what they said yesterday is a game-changer in itself and will rates around the world ever go down again. i think more importantly for people sitting at home, the fundamental question, you say it's removed an overhang for the market. i think what other people are concerned about is whether it's removed a support. in other words -- >> right. >> are the earnings sufficient to be trading 1589 on the s&p? is the economy strong enough? is the economy around the world strong enough to support the market at this level if they're going to pull support away. >> i think what he's trying to say is the economy he hopes will be strong enough. they're not pulling the rug out right now. they've made it clear they're

extremely data dependent. i think they're expecting the economy to be strong enough, and i think they're expecting that when it is, they will start to pull back. to be clear, you know, you made a comment earlier about are we ahead of ourselves from a fundamental perspective? i think the market is very forward looking, right? so the point there is i think the market is looking ahead six months and saying, we're going to be in a very different place -- >> hang on, hang on. i understand that point, but i don't think that's where we are because we were artificially inflated by the fed, and the assumption was that the fundamentals would come up to support us, and, therefore, it's not a normal situation. what we're saying is if you take the fed away, are the fundamentals there to support where we are at the moment. the market wasn't looking at growth 18 months down the line. it was looking at cheap money around the world and a market that just wept up in a single straight line for months because of the fed. >> absolutely. i think that's -- >> can i step in to agree with david here? >> go ahead. >> i believe this economy is absolutely powerful enough to

support this. you know, we are babying, overmedicating this economy. this economy is like a 12-year-old sitting on a bicycle with training wheels. it can cycle forward on its own. we're removing fiscal stimulus this year. i agree with ben bernanke in laying out a time table. i think that does reduce uncertainty, not increase it, but the main thing is, look, the economy is okay. it will gradually improve. the unemployment rate is gradually coming down. w5e789 hwealth has recovered. we have to not be so scared to believe that the economy can only flourish when you have these zero interest rates. it's not true and it's healthier for the economy to take the medication away. >> the argument isn't that we wouldn't like to see that kind of environment and that it would be a sign of health, but that you just have to look at the market trading for what it is. and what we have seen over the last couple days is with each passing day since we have heard from bernanke, more concern out there about whether this tightening in conditions is going to choke off growth,

whether it's something the people can handle and whether the lack of inflation is going to make anyone who has been invested in gold, inflation protected securities, commodities and the like have to pile out of all of those, maybe emerging markets as well and move their money around. >> right -- >> the fed has to desensitize markets here. sorry, go ahead, david. >> david seaburg, go ahead. >> it's interesting. people are so worried about this rise in rates. we saw a move from 1.6% to 2.4% on the ten-year. i get that. a rise in rates is not the end of the equity market. it's the beginning of the second leg of this bull market we're seeing. rates go up, the market is going to catch up there, and i'm telling you, people are really underestimating that. where are you going to put your money right now? in cash? i don't think so. are you going to put it in the 30-year? i don't have an interest in having that duration risk. i'm going to put it in equities. it's the only place right now really to put your money. >> david kelly, before we let you go, we had gray wolf on just now with a technical view of the markets. you guys can talk about fair

value and where we should be, but there was a view from gray wolf that we've had a very bad technical breakdown here and actually the market could look very, very soggy going through the summer, and we're not going to hear from ben bernanke again until september. that's a long time to second guess what they're likely to do. >> well, i think, first of all, ben bernanke will be testifying in front of congress between now and then, so i think we'll hear some more from him. but also the feven and long-term investors need to get beyond the short-term response of equity traders. people shouldn't trade equities. people should invest in equiti s equities. that means investing for a long run, three, four, five years. i don't think that you can time how the market is going to react to various fed statements as they try to get back to normal, but they've got a long road back to normal. they need to get started and they can't be oversensitive to how the market reacts to everything they say. >> david seaburg, david kelly, thank you both for your thoughts this morning. we should add the s&p 500 has

been trading briefly negative in the last couple minutes. the dow is still up by about 27 points, and the vix slightly lower this morning. it was a terrible day for shares of oracle. it is we should say. the stock falling after quarterly revenue came in well below analysts' estimates. jon fortt joins us with more on oracle. jon, stock is down 8.5%. >> yeah, yeah, kelly. it was a quarter where oracle really needed to impress and just didn't. this was q4, the end of oracle's fiscal year, and a time when big deals usually close right at the end of the quarter in may. sales bonuses are riding on it. oracle management all but promised better saying the big deals had dragged over into q4. they projected software licensing would be up 1% 2to 11. it came in at 1%. brazil and australia got called

out as real trouble spots. lots of debate about whether to believe oracle's story on what the problems are. competitors keep trying to tell me it's cloud business they're losing. the weak spots they showed, brazil and australia, aren't places cloud is particular pli strong. plus engineered system actually seems to be doing better for oracle. the next earnings support is september, right around the time of oracle's big open world conference. it's the buzz around new products that will have to get the stock moving. wall street is clearly worried about the threat from the cloud, whether that's actually causing most of oracle's pain yet or not. it's going to be interesting, guys. back to you. >> okay. thank you very much, jon. if you use wi-fi when you're on a flight, you probably know the name of gogo. it just listed on the nasdaq and we showed you the chart, falling below the issue price. we're going to talk to the ceo about the future of internet in the sky next. first, rick santelli, what

are you watching over in chicago for the next segment? >> well, sha boom sha boom, actually it's shibor, but i keep thinking sha boom every time i think of shibor. we will talk about short rates, overnight rates, lending not only in the u.s. and china. we'll talk about why the markets have moved so much. we'll try to figure out is it only about deleveraging and who are we going to do this with? ira. in about ten minutes, you will want to be there. with fidelity's options platform,

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we just went negative on the session for the s&p 500 and the nasdaq. financials, meanwhile, are not having a great day either. down a third of 1%. let's get more on these moves with courtney reagan back at hq. >> hello, good morning to you, simon. financials under pressure again today in the wake of the fed's latest commentary on the economy, of course. the sector down nearly in line with the broader s&p 500. within the group though, there are some strength among the reits. residential leading the s&p 500 after sagging to 52-week lows on thursday, so recovering some of the losses today. commercial reit vornado mostipo some gains. big banks moving in the opposite direction pulling down the financial groups, as you can see here. look at this, citigroup down more than 6.3%. >> we have just turned negative on the dow.

this as we're seeing a move upward in the ten-year u.s. treasury toward that 2.5% level. even though we saw it come down, we're seeing a retracement towards some of the highs we initially hit. >> while we focus on financials, it's worth pointing out it's actually utilities and telecoms and that krr that have really bled over the last two days. that's where you have the disproportionate moves. the fear is people are going out of dividend paying stocks and waiting to go back into treasuries as the returns or the notes, the ten-year notes, as the returns return. >> so hugging that flat line right now in the dow. keep you posted on that. in flight, wi-fi provider gogo listing on the nasdaq this morning. shares priced last night at 17 bucks a share. on the top end of its expected range. but the stock today is falling down 7.5%. joining us now from the nasdaq is michael small, the ceo of gogo. michael, good morning. >> thank you. glad to be here on this exciting day for gogo. >> it's a tough day in markets.

what do you think investors are missing about your story right now? >> well, i think it's gogo versus the fed and china and we're holding our own. i think investors are very excited about our ability to bring the internet to the sky and they know that will change aviation forever, and so i think we have a strong group of new investors in gogo. >> i think, sir, one of the things people are concerned about is this article that's on the front of the "wall street journal" today which talks about how the rules may be changed in the skies. and that on the one hand people are going to be able to use their gadgets, their normal gadgets at lower altitudes possibly during takeoff and landing. more importantly, it details how there will be a discussion about people being able to use their cell phones on planes in the future, and i imagine if they're using their cell phones, they may not buy your service. >> no, i don't think that's true. i think what we saw in "the wall street journal" today is a sign how badly people want to be connected everywhere. they're willing to go to washington to make sure the

rules allow them to use their devices wherever they go. the cell frequencies will not do well in the sky. once the plane leaves the ground, it will be gogo's service. >> so you're not concerned about that at all? >> no, i view it as positive news. >> okay. let me ask you then about the profitability of the company. are you projecting a profit at any stage? i appreciate that there's capital investment upon capital investment. i think you're actually warning in your s1 that you may not make a profit for the foreseeable future, is that correct? >> we have appropriate disclosures in the s1, but we're very optimistic that our business generates great cash flow and profits in the future. it took a lot of investment up front to make all this work for the internet in the sky, and we believe we can leverage investment and it will translate into great profits for shareholders. >> so i can understand why i would buy facebook on the promise that it will one day leverage its 1.1 billion customers. i'm not clear why i should buy

your stock if you are continually investing but never at this stage promising that there will be a profit. there isn't a profit in the future that you're pointing to, is there? >> no, there's very obvious opportunities to grow, cash flow from this business. in fact, a lot of our opportunities in the future will be capx light. a lot of our capacity will be rented from satellites in the future as well as using our air-to-ground network. we transform the aviation industry by bringing connectivity to the sky, and there will be numerous monetization opportunities. we see strong profit potential in our business. >> i was just going to ask, michael, where you see the company in, say, two to five years' time if all goes according to your plan? >> if all goes as we see it, there will be continued momentum in our u.s. business. every day more and more planes get hooked up and more and more customers on each plane use our service. we're going to be introducing a

whole range of new services such as gogo vision which is our streaming video product in the sky, and then, of course, we have a huge international expansion opportunity, and i can't forget to mention our business aviation market where we keep adding our service to private jets every day. >> good luck with your business, sir. >> thank you. >> thank you for joining us. congratulations on the ipo. >> michael small as the shares bounce off their low price. about a 7% decline would make it one of the worst performing ipos of the year. we'll keep an eye on shares off about 6.5%. do you remember this guy? the former enron chief, jeff skilling, in court today. if things go well for him and his attorneys, he could get out of prison much sooner than expected. we will ask the enron whistle-blower sher rron watkin what she thinks of that in just a few minutes. [ kitt ] you know what's impressive?

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the ten-year today, like that traffic, crawling forward. let's get over to rick santelli in chicago taking a look at interest rates. rick. >> we've lost rick. >> absolutely, our guest is ira harrison. before we get into all the fun things we're going to get into as i look up on the board, 2.48% yield, purely as a technician forgetting the markets are not really fully the markets, they're half of themselves, but to understand in my opinion that the breakout is probably around 2.49% on a closing basis. yesterday was in that threshold area. i would certainly think that the momentum models will be going home short if not adding to shorts and treasuries. >> yes, and i would do it very carefully.

we're seeing a lot of disconnects taking place. when you start to see disconnects like this, we're starting to see more deleveraging, unwinding of massive position that is people don't even have a clue really exist out there. i thought when you brought up the piece about the etfs this morning, there's massive amount of leverage in this system, and it does crazy things. so it may technically give me a breakout on a friday which you know as any type of trader you pay attention very close to friday close. i'm going to face this one with some prep dation and wait for more information. >> plus conventional wisdom. i don't know how your e-mails went but every guest, every e-mail i have had last thursday and friday were that, you know, the big boys, the little boys, every boy and girl out there that trades wants to buy the tens, the fives, the 30s, this is a great bargain. the rates we're at about that time right around 2.23% to 2.28%. boy, that's some real pain in the marketplace. >> we have seen enormous pain

and then you have bullard of all people, st. louis was the bastion hf solid monetary analysis. and he's pushing back the other way. we have had a full shift which gets us to the piece that you did beautifully on what is mr. bernanke afraid of. >> so i'm going to ask you that question, ira. what is ben bernanke afraid of? >> we've talked about this for several times already, and i think it goes back to that february 7th piece that jeremy stein, that speech he made. and the basis of that was financial stability or financial instability. that all this action from the fed, and jeremy stein is no academic lightweight. he can hold his own. he's an m.i.t. ph.d. he's at harvard, and i think ben bernanke has a lot of respect for him. i think what ben bernanke had to respond to that that maybe what the fed had done through all of this in stopping the sell-off or the fire sale of assets, which the fed did very well, has

created a huge amount of potential for financial instability, and that's what he is speaking to right now by trying to remove some of that risk that inadvertently has gotten onto the books of the system. >> shanghai interbank offered right, some call it sha-boom, some call it shibor. real quickly, tell me about why we need to worry about or at least keep observing shibor. >> we have to watch it because the chis -- it's a top down orchestrated system. if they didn't want this to happen, it wouldn't be happening. i'm not looking at it from the domestic sense. i look at it more from the international sense. the chinese have shown how much havoc they can play with this system. they're not happy about the g-8 meeting that they're not invited, and they're not happy about what's going on in the world given the japanese agreeing to depreciate the yen at their expense. >> one final word, what we're talking about shanghai interbank offered rate, look at it as an overnight short-term lending rate and as it moves up, it's another barometer of stresses

but we're not sure if it's causing it or as a result of policy. back to you. >> speaking of stress, let's look at where we are on the greek stock market as we head into the close there. a fall of 6%. we'll tell you about that and what that might mean for this market in a moment. the bells are about to sound across europe, just a few minutes left on europe's trading day. we will have the close and all the details after this short break. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

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before we goet to global markets, we're looking at the 2.5% level, psychological level as they round numbers often are. 2.492% is what we're seeing. >> announcer: the european markets are closing now. >> simon, it's certainly feeding in to the broad moves across global markets. what has been happening with this ten-year note in the past month since that may 22nd testimony. >> yes, and it's rough out there for credit i think is the point you're trying to make. it's rough across the board. it's actually quite rough for credit in europe as well. it's another reason why we're in negative territory as you can see. we have turned around during the course of the session. look at greece at the bottom. this is a concern we'll come back to in a moment with that 6% fall in greece. there was some selective profit taking. i just want to show you where we've traded now since may the

22nd, which is, of course, when ben bernanke first gave the testimony and raised the subject of tapering. this is the three major stock markets around europe. the footsie 100 is going back down into correction territory, a fall of 10%. it's rough because once you remove this anesthetic from the central banks, all these nasties will reappear, whether that's china, greece, they're going to worry the markets once again but effectively you're not inoculated. it was interesting the stock picking we had today, food and beverage was one of the gainers in the market earlier. let's have a look at some of those. you see there's profit taking even on that. we saw travel and leisure stocks were doing well as people sought out some security there. the likes of intercontinental and -- there we go. yes. we're still slightly higher. but the broader market is moving down. we did have a recovery earlier on the bond markets in italy and spain. let's look at where we are now on that amidst the sell-off. so the yields, as you see

earlier in the session, have been going back down, but now they, too, have started to rise as you get that marginally more stressed environment, and i want to show you the one-week chart of the greek ten-year notes, and that you will see is down very slightly, but it's had one hell of a week. the reason the stock market is down, on the one hand, you have the prospect that the coalition could break apart, members leaving as a result of the unrest there, particularly closing down of the state brofer. more importantly now that the imf is hinting that it may withhold some of the payments if they don't start balancing their budget and private advertising what they're supposed to private advertise. you have the ministers of the european union meeting in luxembourg. they were tight-lipped about what might happen to greece. >> i'm keeping an eye on what's happening now back here, down 57 points on the dow. want to show that ten-year fresh

ri yield. we touched 2.5% for the first time since august 2011. we're sitting just below that level now. this is a different trading backdrop and we'll bring bob pisani into the conversation. a different trading backdrop than yesterday when we saw a sell-off in fixed income and in stocks. in other words, the treasury yield was falling. today the treasury yield is rising and stocks are selling off on that. >> i think the important thing is so far it's been a reasonable quiet day. we have seen some weakness as we go into the european close. the important thing is not a lot of big price gyrations. a little weakness in materials. let me put up the financials. i'll give you a little two cents on what i think is going on in the financials here. it's very simple. you look at this and you say to yourself some of the big money center banks are all to the downside like citigroup,ba bankf america, but it's the regional banks if you look at the regional banks are generally all to the upside. i think what's going on is traders are rotating out ever money center banks and into the regional banks based on the why

idea that higher rates will help margins for the regionals. the steepening yield curve overall will help the regional bankses. that's the story i'm getting. wells fargo, u.s. bank corp, pnc, regional guys up. big money center guys are down. that's an indication afrotation play going on. let me talk about housing. a lot of penal asked about home building stocks. i was the real estate analyst 20 years ago. i have a lot of opinions on mortgage rates. it's ugly this week. here is what everybody is worried about. let me put up the mortgage rates. 30-year fishtioned rate mortgage, 4%. it's going to cost you about $1,400 -- $1,432. put that up here and show it on the screen. the important thing is where we're going. people are afraid it's going to go to 6% from here. 6% would raise it about 25%. to about $1,800. now, let me tell you something, i think this is very unlikely this is going to happen but this is the worry that everybody has

got out there. why is it not going to happen? because ben bernanke has told everybody they're going to remain dovish. if it goes in that direction, they're going to keep up with quantitative easing. they're not going to let interest rates go to 6%. affordability, historic highs. look on the demand side. job growth slow but moderate. household formations are increasing. mortgage rates are low but rising. this is a fantastic environment. on the supply side, it's still excellent but keep an eye on the rising pricing. that's the one thing that could slow things down next year, but for this year so far this is just looking like an outstanding environment with mortgage rates at 4%. i think 6% very unlikely. the fed will act. >> i'm still worried about what's going on right here but we've already seen the ten-year back to the 2.5%. jeff gundlach was saying maybe it won't happen this year. the question is whether it's sustainable, whether we stay here. bob, thank you, sir. big news from the conference board, it will no longer provide economic data in advance to news

organization because they think people are profiting unfairly from the information. eamon javers was first to break this story and he joins us from washington. >> good morning, simon. you may remember back on may 28th we brought you the news there was some unusual trading ahead of the conference board's release of the consumer confidence index. we looked at trade being a quarter of a second early. well, fast fooshd to just yesterday, the conference board making that announcement that you just talked about saying they're going to end the media embargo of their data saying that they think that some of this data is leaking out early or could possibly be leaking out early to high frequency traders. joining me is the conference board's ceo john specter. thanks for joining us and offering us a chance to understand what happened here. why did you make this decision? >> well, it's really just as you said. we had some evidence that not all of the processes of the embargo agreement were being followed. we didn't have direct evidence of it. we're unable to monster trading

at the millisecond level the way you show s in your report. we're a small organization, but we were concerned that there were some discrepancies, and more importantly, we were concerned there was a perception there could be discrepancies and we just didn't feel it was worth the risk of creating -- of the perception of an unlevel trading field. trust is the most important thing. >> obviously in this era of high frequency trading a couple milliseconds makes a big difference in opportunity for people to scoop up profits. you told me that you got some new information on tuesday about just what had been happening here. tell us what new you learned and what you think has been going on? >> well, on tuesday we got a call from one of our -- we release the embargoed information to about a dozen major accredited news organizations. we got a call from one of them on tuesday, and by the way, this happens -- it's not on a regular -- every two or three years something like this happens.

it's very irregular but this was an organization that had self-reported to us they had found a technical glitch in their testimony. they were not properly aligned to the atomic clock that we use to time the release of our indices to exactly 10:00, and they discovered that system. they self-reported it, and -- but that really didn't have an affect on our decision. we had made the decision about three weeks ago. we actually just communicated it to the media yesterday morning. >> now, last week we reported that thomson reuters pays the university of michigan $1 million a year for access to their consumer data, and they actually sell that on a tiered basis two two seconds in advance to high frequency traders. obviously that's a very profitable business model for the university of michigan which compiles that data. why have you guys not done something similar to your data? >> i don't want to sort of be preaching here. this is a very -- these are very murky waters, and we began to look at this issue about eight months ago. frankly, we were looking at whether or not we could or

should monetize the data, and there are no guidelines. it's not illegal. and we really had very little to go on, and so we had to take a lot of time to try to figure out for ourselves whether this was the right thing to do. we never released the information in advance. we don't get paid for releasing the information at 10:00. we decided through this review that we did not want to try to monetize it in this fashion, that we could make money at it, but that we felt that the asset has become almost a public asset and we felt the need to protect that and to protect the trust by the man on the street that the markets aren't a rigged game. >> yeah, that's the key question here. why do you think this is all about trust and why do you think that that might be eroding now with some of these early releases surrounding some of this consumer and market-moving data? >> i don't think we should view this issue in isolation. i think this alone would probably not have a huge impact on people's perceptions of the market, but we have been through a lot as a country in the last five years. there's been a lot of scrutiny of your financial system.

there's been scrutiny of the markets. there's been scrutiny of business in general, and there's lots of indications that trust in business and trust in business leaders is at a very low level. and we just think this is not the time to be cavalier about that trust and to be taking every possible advantage. we think it's time to be rebuilding that trust. we can only play a very small part in it, but we decided that that was what was right for our organization. >> all right. conference board ceo john spector, thank you for joining us here on cnbc, and, guy in new york, i'll turn it back over to you. >> fascinating interview. thank you for that, an important issue. here is a familiar face. former enron ceo jeff skilling in court today hoping to cut a deal to get out of jail early. we'll ask enron whistle-blower sherron watkins what she thinks about a potential early release. we'll be right back.

we'll ask enron whistle-blower

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that and much more when we see you at the top of the hour on post 9. >> looking forward to it. former enron ceo jeff skilling is back in court this morning, seen here arriving just after 9:00 a.m. eastern. skilling and federal prosecutors going before a judge in houston today to reduce the 24-year prison sentence that skilling got for his role in one of the most notorious corporate crimes in history. if a judge approves a deal, skilling could get out of prison in as little now as four years. on the cnbc news line is sherron watkins, the whistle-blower in the case and former vice president of enron. sherron, welcome back to the program. how do you feel to see this man in court today asking for his sentence to be reduced by ten years? >> well, he has served seven years, whether he serves three more years, four more years, even seven more years, it's a long prison sentence.

he's seen his parents die, his youngest son die. so he's paid a steep price, but there's still a lot of animosity towards him for failed leadership, and i almost think it's a holdover from 2008, you know, where no one has been prosecuted for the collapses of lehman or bear stearns or merrill lynch and so far. >> yeah. and the resentencing hearing today, of course, under the victim rights act. there will be those that will be able to put the case that perhaps he should stay in jail, and we should remember that even through the bankruptcy itself, you had not only 5,000 jobs going, but $1 billion of pension funds that were destroyed at the time. at the same time, sherron, i suppose if he gets out early, that's not going to change those dynamics, is it? >> no. and i think for enron victims, there is a sense that justice --

so there's comfort that he has served a fairly long prison sentence. when i give talks on corporate accountability and leadership today, the number one question i get is why no prosecutions of, say, the executives at lehman brothers, because their bankruptcy examiner showed lehman was doing the exact same things as enron. >> and sherron, there are some people who argue there would have been tougher handling of lehman if it were, say, a houston based firm and not a new york based firm. >> that's an interesting point. >> well, i should say this is a bit of a devil's advocate argument. they're completely different firms. was enron systemic? there's a sense in which some of these financial firms get themselves tangled up, but the point being, you know, was there some kind of home bias by a lot of this happening in new york here? >> well, i think part of the problem was the government bailed out everyone but lehman. they needed the executive of

those financial firms to work the firms back into health and pay the government back. so it was not politically popular for the department of justice to criminally go after financial executives as a matter of policy because for the most part we needed them to be restored to health. >> and sherron -- i'm sorry, go ahead. >> well, there's a sense i think throughout the country of injustice because those executives have ridden off into the sunset with tons of money, yet rank and file employees were left with nothing, and skilling still has enough money to keep legally battling the department of justice. that's why he gets his day in court today. so there's a sense of rank and file guy, the ordinary american, that rigged game that the conference board ceo talked about in your earlier segment that still exists today. >> yeah. i mean, he will sacrifice $45 million, sherron, as you know so well and drop the litigation but i think the broader point you're making a well taken.

thank you for joining us. sherron watkins, whistle-blower for enron. now the sell-off in financials is accelerating. we've been keeping an eye on the sector. we'll dig deeper into that move when we come back right here on "squawk on the street."

the bounce back after two days of heavy losses is over. all the major indices are negative. financials taking a hit on the back of the prospect of new

regulation. kayla has more back at hq. >> simon, the sector is sliding. it was down as much as 1%. it was in sympathy with the overall market. also something of a correction trade because the banks had gotten ahead of the tape. feeling the heat from the banking sector. major u.s. banks down more than 1%. you take a look at this, you can see goldman sachs down 1.7%, bank of america, 2.5%, morgan stanley 2.75%. that's on the back of a report saying regulators are close to doubling the leverage ratios required at banks. it would come at a tough regulatory time for them. the federal reserve has been working with other agencies for months to develop an appropriate leverage ratio, but our sources say it's unclear at this point whether that will be done in the next two weeks when the basel three bank rolls are expected to be finalized. citigroup is faring the worst. it's get a one-two punch, one from that capital report

alongside all the big banks, but, two, from the falls in the emerging markets. 57% of citi's revenues come from abrood, much of that in the emerging markets. news this week that china's economy may be cooling has also hit citigroup stock. you can soo he that emerging market etf down as well. back to you. >> kayla, thanks. important to keep in mind it is the financials as well as some of the more defensive areas of the market getting hit today. now, this is why it pays to watch us here "squawk on the street"ing on the street. we keep you ahead of the curve. instagram founder kevin sistrom joined us on our stage. >> instagram is at an interesting place in the world. people are signing up and sharing their lives via photos. in the long run i expect to see us grow into very large media company. >> he was close. instagram was absorbed into a large social media company when facebook purchased it for a

billion dollars three months after that interview. this week -- we were there with the ceo and david reese. take a listen. >> we're going to remain an independent company and that means we get the best of the best. you know, we're really excited to get access to the deep expertise and knowledge of the stratus team, and really explore what we can do with just a global reach we get out of this merger. >> i think this combination is a great combination because it's bringing together stratasys and makerbot. >> we spoke to them yesterday. of course, you might have gotten the feelings is was up when we first spoke to pettis just a

couple weeks earlier. >> i have a standard answer. i really shouldn't and i won't comment on speculation. that's just all i can say. >> last june, in fact, so there were perhaps movements afoot. "squawk on the street" breakthroughs, keep an eye out for them. the future of business is here now. >> now arriving in los angeles, a brand new billion dollar airport terminal. we'll take you live to l.a.x., the new l.a.x., when we come back. [ male announcer ] with free package pickup from the united states postal service a small design firm can ship like a big business. just go online to pay, print and have your packages picked up for free. we'll do the rest. ♪ [ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything.

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okay. listen up flyers, a brand new $1.9 billion terminal opens its doors at l.a.x. today. our very own jane wells is getting an inside look and she joins us now from los angeles airport. have they let you in yet, jane? >> reporter: a little bit, simon. we got a tease. l.a.x. is the third busiest airport in the nation behind atlanta and chicago but nobody wants to come here. it's not a model of elegant efficiency. with the longer ranges of modern jets you don't have to come here. so to stay competitive the international terminal needed a makeover. the entire new terminal has been

designed to look like a wave from pacific. laser guided mechanism for pilots to bring the planes into the gate. of the $4 billion being spent to up date, nearly half is going into this terminal. international travelers are the most important economically. >> without these gates, these airports were having to park at a remote gate off by the beach and be bused in, passengers had to be bused into the terminal, which is not exactly the kind of hospitality that los angeles wants to offer. we have 17 new food dining concepts that have never been in an airport before. no longer are we going to be the tired airport where everybody just kind of rolls their eyes and says i don't want to have to stop at l.a.x. no. this will be a place where people want to stop. >> reporter: well, we'll see. the retailers here are going to share up to 32% of their revenue was the airport, and the airport is also raising landing fees and terminal rentals.

airlines aren't going to like that but the airport hopes they will see it as a win/win. i have to say they are opening it in stages. i landed here from overseas a week ago and my joke was always that flying to l.a., the longest part of the flight is after you land and taxi to the gate but last week it was a breeze. we got right in. >> jane, paid for by the city of los angeles, yeah? >> reporter: i'm sorry, one more time? >> is it paid for by the public? it's paid for by the taxpayer, yeah? >> reporter: it's partly paid for with bonds and taxpayer, partly paid for by the airlines. they're raising landing fees and raising terminal rental and there's another $2 billion worth of work they're going to be doing around here. terminal four at american airlines really needs a makeover. >> i was going to say, how many americans are even going to ever see that terminal? jane, still very good to know. it reminds me frankly and you would know this as well, simon, of heathrow. >> we have a very nice terminal at heathrow but i don't think it

was paid for by the taxpayer. jane, we'll see you later. the view from l.a.x. a quick check on the markets. we are negative. the bounce back we had earlier eroding. >> 2.48% on the ten-year. >> in the meantime, it's the weekend for us. that's it for our team. >> thanks for tuning in. >> "squawk on the street" -- "the halftime report" is now. guys, thanks very much. welcome to "the halftime show." four hours to go until this close, and here is where we stand on the street on this friday. stocks are trying to snap back. not having much success though. right there is where we are. the dow is down 40, s&p is down 7. that's about a 0.5% loss. the nasdaq lower by nearly 1%. golden moment? what's the next move for the precious metal? rally or run for the exits? home improvement, rising